31 October-6 November INDICATORS Inflation Rate for the week ending 22 Oct Categories Weekly Annual Primary articles 0.2 12.1 Fuel, power, light & lubricant -0.2 14.5 Dear Reader, In the backdrop of rising international crude oil prices and depreciation of India rupee, the government owned oil firms increased petrol prices by Rs 1.82 per litre effective from November 5. This The annual inflation in primary articles increased to 12.1% for the week ended 22 October, from 11.8% in the previous week. The annual inflation in food articles increased to 12.2% for the week ended 22 October from 11.4% in the previous week, while annual inflation in Non-Food articles declined to 6.4% from 7.7% in the previous week. The Index of Eight core industries having a combined weight of 37.9% in the Index of Industrial Production (IIP) showed a growth rate of 2.3% in September compared to 3.3% in September 2010. India s export in September recorded a growth of 36.4%, standing at US$ 24.8 billion. Imports stood at US$ 34.6 billion, recording a growth of 17.2%. India s Human Development Index ranking falls by 15 ranks to 134. Foreign Exchange Reserves as on 28 October stood at US$ 320.4 billion, up is the 13th hike in petrol prices since the fuel was decontrolled in June last year, and second since the middle of the last month. This move would be another blow to consumers who are already battling high double digit food inflation. However, this increase in petrol prices is expected to have somewhat limited in inflation because cascading effect of petrol is less as compared to diesel. Thus, expectations of RBI pausing the interest rate hike in the forthcoming Monetary Policy Review remains intact. Chandrajit Banerjee Director General, CII by US$ 2.0 billion from the previous week. The call money rates as on 4 November traded in the range of 5.0-8.6%. At the Treasury bills auctions held during the week, the YTM for 91 day T-Bills stood at 8.6%. IN THIS ISSUE Markets Policy Development Industry News Global News
2 POLICY DEVELOPMENT The Financial Services Secretary announced that Net Absorption through LAF (Rs Crore) RBI is likely to come out with guidelines on 0 allowing new private banks by November end. -10000-20000 31-Oct 1-Nov 2-Nov 3-Nov 4-Nov The Indian Government has approved 140 billion -30000-40000 rupees (US$ 2.85 billion) for the recapitalization -50000 of state-run banks in the current fiscal year that -60000 ends in March. The Comptroller and Auditor general of India will Exchange Rate Series2 Series1 scrutinize the expenditure and outcome of the public works initiated under the Mahatma Gandhi National Rural Employment Guarantee Scheme in the 12 states that receive the largest share of USD 50 31-Oct 1-Nov 2-Nov 3-Nov 4-Nov 69 68 68 67 Euro the fund. BANKING INDICATORS Rs. Crore Outstanding as on % Variation over Indicators 212 October, August, Fortnight Year Total Bank Credit Food Credit Non Food Credit 41,50,520 68,922 40,81598 0.0 8.9-0.1 19.3 46.0 19.0 Aggregate Deposit 56,18,986-0.1 15.2 Broad Money (M3) 69,58,664-0.1 12.0 Credit Deposit Ratio 73.9 Source: RBI - 2 -
3 EQUITY MARKETS Markets across the globe tumbled on account of the unexpected Greek proposal of a referendum on the EU bailout package. However, Papandreou instead opted for political consensus and is ready to negotiate a coalition government if his socialist allies give him the confidence vote. On a positive note, ECB s rate cut of 25 basis points to Closing Value as Global Stock In- Weekly as on on 24 September November Weekly (%) (%) NYSE: DJIA 11,3.6 11,983.2 1.9-2.0 FTSE 100 5,292.0 5,527.2 3.2-3.1 Nikkei 225 Nikkei 225 8,801.4 8,950.7-2.8 1.7 Straits Times Straits Times 2,848.2 2,843.1-2.0 3.5 KOSPI KOSPI 1,928.4 1,867.8-0.1 5.0 Source: Yahoo Finance Source: Yahoo Finance 1.25%, prevented stocks from tumbling further downwards, as it indicated that the new ECB head will support growth in the face of inflation. Indian stock markets continued to be volatile on account of the establishments in Greece. Total turnover during the week on BSE stood at Indian Equity BSE SENSEX BSE 500 S&P CNX NIFTY S&P CNX 500 Source: NSE, BSE Closing Value on Closing Value on 4 Week's %% 2 September November 16,821.5 17,481.9 6.1-1.8 6,538.1 6,706.1 5.6-1.1 5,040.0 5,265.8 6.2-1.8 4,070.9 4,179.7 5.7-1.2 Rs 11,365 crore and on NSE at Rs 53,774 crore. Net Institutional Activity Equity Debt Weekly FII (US $ Million) 644.0 3.1 COMMODITY MARKETS Year -to-date FII (US$ million) Weekly Mutual Funds# (Rs Crore) 558.3-2,933.0-441.4 1,227.4 Source:SEBI #as on 3 Nov, NYMEX West Texas Intermediate Crude Oil for November delivery stood at US$ 94.1 per barrel on 3 November, up by US$ 3.9 per barrel from the previous week. New York spot price for Gold was US$ 1,755.8 per ounce as on 4 November, up by US$ 14.8 per ounce from the previous week. Closing Value as Week's Commodity Spot Indi- Closing Value as on Week's % on 2 September % 5 November MCX AGRI 3099.93 3,247.5 1.71.0 MCX METAL 5036.24 4,752.7 2.32.2 MCX ENERGY 2796.07 3,205.2 1.8 1.8 MCX COMDEX 3593.36 3,669.7 2.1.8 Source: MCX, NCDEX 3
4 INDUSTRY NEWS BSE Closing Value on 4 November Week's % AUTO INDEX 9,212.4-3.7 BANKEX 11,232.6-1.2 BSE CAPITAL GOODS 10,889.9-1.3 BSE CONSUMER 6,510.6-1.9 BSE FMCG 4,173.1 0.5 BSE HEALTHCARE 6,137.5-0.5 BSE INFOTECH 5,731.5-1.7 BSE MID CAP 6,251.2-0.4 Mining Coal India Ltd (CIL), the world s largest miner of the fuel, will use satellite technology to prevent shipments from being hijacked amid a shortage that has hit supplies to thermal power projects across the country. Supreme court commissioned study on iron ore mining in Karnataka s Bellary district has suggested production of the steel making raw material should be cut by as much as 40% to prevent environmental degradation. Fertilizer BSE SMALL CAP 6,932.0-0.4 BSE TECK INDEX 3,489.8-0.9 METAL INDEX 11,650.0-4.0 OIL & GAS INDEX 9,054.7-1.4 Source: BSE The Department of Fertilizer has objected to giving direct cash subsidy to retailers even in the interim period, saying that it will not serve the purpose of a new mechanism. Oil and Gas The oil marketing companies announced petrol price hike by Rs 1.8 per litre. This is the third hike in less than six months. The exact price hike for users would vary as different State Governments levy different levels of local taxes on petrol. CNX CNX Segment Closing Value Closing Value on on 4 November 21 October Week's % Auto Attempting to internationalize its automotive brand aggressively outside the crisis ridden Euro-zone, leading French carmaker PSA Peugeot Citreon announced it will introduce its products in the New Delhi Auto Expo 2012 and roll out new cars from the upcoming Sanand plant in 2014. CNX CNX NIFTY Junior 10,178.7 9,682.7 1.8-2.1 CNX CNX MIDCAP 7,320.0 7,008.1 1.1-1.8 BANK BANK NIFTY 9,836.4 9,695.4-0.80.4 CNX CNX IT IT 6,200.2 5,948.5-1.2-2.8 CNX CNX Realty 262.5 240.2 0.1-2.8 CNX CNX Infrastructure 2,698.6 2,554.3 0.3-3.5 Source: NSE NSE - 4 -
5 GLOBAL NEWS USA In the week ending 29 October, the advance figure for seasonally adjusted initial claims was 397,000, a decrease of 9,000 from the previous week s revised figure of 406,000. US Non-farm payroll employment continued to trend up in October (+80,000), and the unemployment rate was little changed at 9.0%. Employment in the private sector rose, with modest job growth continuing in professional and business services, leisure and hospitality, health care and mining. Government employment continued to trend downwards. Europe Asia president announced for a referendum on the same. However, the referendum did not take place, instead the Greek PM faced a vote of confidence on Saturday, which he survived despite great speculation. Thus, avoiding snap elections that would have torpedoed Greece s debt bailout deal and inflamed the euro zone s economic crisis. Indonesia s economy grew by 6.5% in the three months through September from a year earlier. Indonesian economy has grown over 6% for the fourth consecutive quarter as consumption and investment countered the impact of a faltering global economy. Post the Euro Zone s leaders decision on a package to deal with the sovereign debt crisis, Greek Disclaimer The data used here are from various published and electronically available primary and secondary sources. Despite due diligence, the source data may contain occasional errors. In such instances, CII is not responsible for such errors. CII Economy Update is a weekly report prepared by the CII Economic Research Group. Reach us at: ecopolicy@cii.in 2-F, Sector 18, Udyog Vihar, Phase IV, Gurgaon - 122 015, Haryana, INDIA Tel: +91-124-401 4060-67 Fax: +91-124-401 4080 Email: ecopolicy@cii.in Website: www.cii.in 5